The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/individual-has-20000-in-an-ira-and-they-need-29818621.aspx

Subject:  Re: Cheating the 59 1/2 rule? Date:  2/1/2012  1:16 PM
Author:  PSUEngineer Number:  70073 of 76421

Individual has $20,000 in an IRA and they need $10,000 of that to meet some emergency need. They convert $10,000 to a Roth. That $10,000 becomes "principle" and is taxable for 2012 as income. Once in the Roth account, principle can be withdrawn at any time without penalty. The withdrawal is tax free and IRS penalty free.

Net result is a $10,000 withdrawal from the traditional IRA with no penalty.


There is a five year waiting period for removing money from conversions without additional tax on early distributions.

PSU
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us